Feb. 13 (Bloomberg) -- Take-Two Interactive Software Inc.
agreed to take over development and production of World
Wrestling Entertainment Inc. video games from bankrupt THQ Inc.

THQ’s agreement reached with the maker of the “Grand Theft
Auto” video-game franchise, WWE and Yuke’s Co., a Japanese-based game-developer that was contracted by THQ to help produce
the wrestling video games, will save the company millions by
reducing claims against the bankrupt video-game maker, according
to court documents filed yesterday.

“By working together to transition development of WWE
games going forward the parties have minimized the harm to WWE
and Yuke’s, which have, in turn, agreed to substantial
reductions of their claims” against THQ, lawyers for the
company said in court papers. The lawyers said without the
agreement, WWE and Yuke’s claims “would certainly exceed $30
million and might exceed $60 million.”

THQ, the maker of the “Saints Row” and “Company of
Heroes” video games, failed in its effort to survive the
bankruptcy reorganization intact as individual titles and
studios were gobbled up by competitors at an auction last month.
Most of its assets were sold at the auction, bringing in about
$72 million. The remaining assets at the company, including the
“Darksiders” franchise, are worth about $29 million, according
to THQ attorney Jeffrey C. Krause.

New Agreements

Under the accord, the WWE and Yuke’s contracts will be
terminated and the companies will be allowed to enter into new
agreements with Take-Two, which will hire THQ’s employees that
work on the wrestling games, according to court documents.

The deal will also “eliminate very large damage claims”
that would have otherwise materialized from terminating the
contracts, according to the court filing.

WWE agreed to waive its pre-bankruptcy claims of about $45
million and any claims for annual royalty advances of about $7.5
million for the licensing contract that would have run through
2017. THQ will pay WWE $650,000 in royalty payments for the WWE
games sold while under bankruptcy protection.

THQ owns about 14 percent of Yuke’s equity and has agreed
to give the Japanese developer the 1,552,000 shares, about $4.5
million in value, in exchange for a release of Yuke’s pre-bankruptcy claims of about $15 million to $20 million. Yuke’s
will also get a $250,000 royalty payment.

‘UDraw’ Losses

The Agoura Hills, California-based video-game maker said it
was forced to seek bankruptcy protection after sustaining losses
for the past five fiscal years. The company listed assets of
$204.8 million and debt of $248.1 million when it sought court
protection on Dec. 19.

The company was devastated by recent losses tied to the
“uDraw” peripheral device for video-game consoles. While the
device that lets users reproduce their drawings on their
television had early success on Nintendo Co.’s Wii console, the
versions for Sony Corp.’s PlayStation 3 and Microsoft Corp.’s
Xbox 360 struggled to gain traction and “fell far short of
expectations,” according to court documents.

The case is In re THQ Inc., 12-13398, U.S. Bankruptcy
Court, District of Delaware (Wilmington).